Why most Corporate Finance firms get “Strategic” wrong

Too often corporate finance firms use the word strategic to mean:

“We know your sector.”

“We know the buyers.”

“We’ve done deals like this before.”

“We can get you a great multiple.”

All useful. All important.

But none of them, on their own, constitute strategy.

What good corporate finance firms do well

Most good corporate finance advisers are excellent at two things.

First, running a process: preparing materials, identifying buyers or investors, managing outreach, coordinating diligence and creating competitive tension.

Second, executing a transaction: negotiating valuation and terms, managing issues as they emerge and keeping momentum through to completion.

Sector experience matters too. So does having strong relationships.

Knowing the market can get you to the right people faster. Existing relationships can improve access, accelerate conversations and sometimes increase deal certainty.

These are valuable capabilities.

But they are primarily execution and access.

Strategy is something different.

What “strategic” really means

A genuinely strategic approach starts before the Information Memorandum is written and well before anyone starts sending emails to buyers.

It starts with understanding the business.

What is actually valuable about it? What could make it significantly more valuable? Where does it sit within its market? What does it have that a particular buyer cannot easily build? What growth opportunities could another owner unlock? What weaknesses will investors identify? And which of those weaknesses should be addressed before going anywhere near the market?

In an M&A process, strategy is about understanding the potential value intersection between seller and buyer: synergies, capabilities, customers, technology, geography, talent, growth opportunities and strategic fit.

In a fundraising process, it is about the intersection between company and investor: ambition, market opportunity, capital requirements, risk, positioning and the credible path towards value creation.

That requires more than knowing corporate finance.

It requires caring about—and understanding—the actual business.

The product. The customers. The people. The competitive environment. The economics. And where the business could go next.

An adviser doesn’t need to run the company better than its founder.

But they do need to understand it well enough to ask difficult questions, challenge assumptions and recognise value that may not be obvious from the financial statements.

Understanding the business is the prerequisite. Strategy is what you do with that understanding.

So why isn’t it all about the network?

Years ago, I had a friend in the talent-management business whose best friend was a well-known television celebrity.

We had set up a production company together with this celebrity and, one day, I asked him how important all those industry relationships must be.

Surely getting access to famous actors, presenters and other talent took years of networking?

He quickly put me straight.

“No. You need the right product. Sometimes that’s money, but more often it’s the right script or the right show. And you need their number. But that’s easy to get if you’ve got the right product.”

It stuck with me because the same principle applies surprisingly well to corporate finance.

People often overestimate the scarcity of access.

If you have a genuinely compelling opportunity, getting in front of the right buyer or investor is rarely the hardest part.

You still need relationships. You still need to know who to approach. And a good adviser should know how to reach the people who matter.

But access doesn’t compensate for an opportunity that isn’t ready.

The harder—and more valuable—work is making sure you have the right product to put in front of them.

Your company is the product

When you’re raising capital or selling a business, your company effectively becomes the product.

That doesn’t mean dressing it up as something it isn’t.

It means understanding what makes it strategically valuable and presenting that value through the lens of the person sitting on the other side of the table.

A financial buyer may focus on recurring revenue, margins, cash conversion and the opportunity to scale.

A strategic buyer may see customers, capability, technology, talent or access to a market they want to enter.

An investor may be prepared to accept limited profitability today if there is compelling evidence that capital can create significantly greater value tomorrow.

The underlying company hasn’t changed.

The strategic relevance has.

A good adviser therefore shouldn’t simply ask, “Who might buy this?”

They should also ask:

“Why would they buy it—and why now?”

Sometimes the most strategic thing is not to go to market

This is particularly important for founders who are relatively early in their journey.

The temptation can be to test the market as soon as there is inbound interest or an adviser produces an impressive-looking buyer list.

Sometimes that is exactly the right thing to do.

Sometimes it isn’t.

If six or twelve months of focused work could materially improve recurring revenue, reduce customer concentration, strengthen management, prove a new product or establish a more compelling growth story, going to market immediately may destroy rather than create optionality.

You generally only get one chance to make a first impression with a serious buyer.

There is little value in showing an unfinished story to 100 organisations simply because you can.

A short list of the right counterparties, approached with the right proposition at the right time, can be considerably more valuable than a long list approached too early.

Why strategy matters

Ultimately, “strategic” isn’t about a buyer list, a valuation multiple or the size of someone’s contact book.

Those things matter—but they sit downstream.

The strategic work is understanding the business, identifying where its value intersects with the market, deciding what needs to change before a transaction, positioning the opportunity correctly and choosing when and how to engage.

Then execution takes over.

The best corporate finance advice combines both.

Because a perfectly executed process around the wrong proposition is still the wrong process.